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(Bloomberg) -- Drugmakers are feeling the squeeze from governments and insurers trying to save money while the cost of developing new drugs soars. This is pharma now, says Takeda Pharmaceutical Co. Chief Executive Officer Christophe Weber, and the outlook isn’t any better.

The solution? Scale up, says the French executive who’s run Takeda since 2015 and is currently in London seeking investor support for its planned $62 billion takeover of Shire, whose gastroenterology, neuroscience and rare-disease businesses he says are critical to accelerating the company’s transformation.

Just a week ago Takeda clinched a deal to take over Shire, a company that’s about 50 percent bigger than its Osaka-based buyer by market value. The purchase, the largest ever for a Japanese company, would catapult Takeda into the top ranks of global pharmaceutical companies by revenue -- assuming Weber can persuade investors it’s worth the risk.

“Investors were skeptical when there was uncertainty” around whether Takeda would go ahead with the deal, as the company raised its offer repeatedly this spring, Weber said. “Their serenity is improving every day.”

The CEO said he’s confident shareholders will approve the deal -- even though Shire shares are trading about 7 pounds below the roughly 49-pound ($66.12) agreed price, indicating an element of doubt remains. Since Takeda announced the agreement to buy London-listed Shire, its own shares have risen 2.4 percent, though they’re still down 14 percent since the Japanese company disclosed its interest.

Shire shares closed up 0.8 percent to 42.16 pounds on Wednesday in London while Takeda fell 0.4 percent to 4,737 yen at 11:31 a.m. in Tokyo Thursday.

Some investors are still having difficulty wrapping their heads around how Takeda will afford the deal and generate savings they hope will lower its debt level, Weber said. The company has set a target for net debt of two times earnings before interest, taxes, depreciation and amortization, or Ebitda, in the medium term.

“I’m still meeting investors today who have not done the math,” he said. “I think it takes time for people to understand the deal.”

Weber said the Japanese government, which was informed just before Takeda made its move, is fully supportive as it seeks to develop national industrial champions that can compete on a global scale. That’s a growing need for Takeda, which is confronting limited prospects for growth in its domestic market, where the population is shrinking.

Price Reforms

Adding to the pressure, the Japanese government has pushed through health-care reforms that will drive down pharmaceutical prices by 8 percent this year, Weber said. In the U.S., President Donald Trump has also put forward a plan to reduce drug prices.

Takeda, which has lost patent protection on key drugs and has a dwindling pipeline of new ones under development, has been transforming itself in the last decade into a more research-focused player. The Shire acquisition is a crucial piece of the puzzle, Weber said, because it would expand Takeda’s research operations and add rare-disease treatments to the company’s core businesses.

Weber, the first foreign CEO of 237-year-old Takeda, said the key to the deal will be a successful integration. That’s an area where some Japanese companies have stumbled when going overseas. In a move months before shareholders will even vote on the deal, the CEO said he had appointed Helen Giza, a U.S.-based Takeda executive, to oversee integration.

Ratings agencies have raised questions about the scale of the transaction. Moody’s downgraded Takeda’s ratings last week on doubts that it could adequately reduce its leverage. The company is on review for further cuts, as Moody’s analysts expect its net debt level to almost double to six times Ebitda after the Shire acquisition.

Takeda would consider selling assets in areas like ophthalmology, general medicines and vaccines, Weber said, but he’s confident the company can keep its investment-grade status without large-scale disposals.